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OT (I Hope) The Foreclosure Abyss Again

N

noncompos

Well-known Member
When I posted on Ibanez in the Mass Sup Crt on 1-23, I was a little behind...it seems the Court decided AGAINST the banks on 1-7-11 (that is, that the banks had no legal standing to support their foreclosures)...
While only directly affecting Mass, each such decision gives cover (and grounds for thought) to other courts...
NOW the Mass Sup Crt has under consid the next step: if you bought from a bank that conducted an invalid foreclosure, what do you have, if anything??? (Bevilacqua #10880).
We are, as the ancient Chinese curse goes, living in interesting times...
 
In Ohio I had a friend that what the bank did was sell the mortgage to I believe it was Del Monte. Del Monte payed the bank and foreclosed on the paper. That's how they took over a family farm and turned it into a Corporate. They did allow Dan's mom and dad to live on the place until they die but at the rate they are going it won't be long.
 
If you bought title insurance you would be ok. If you relied on the bank's crooked and incompetent repo contractor for your title you may be SOL.
 
On Title Ins: MAYBE...I think it was Mike(WA) who said their owners policies all had an exception for any foreclosure irregularities, in which case the Title Ins Co would be off the hook... I"ve been out of the business for 10-?? years, but I don"t recall any of our owners policies (OR) ever having such an exception in what we called Sched B (recorded esmts, mtgs, etc) and I"ve examined a lot of foreclosures we wrote on. BUT I don"t have a policy copy at hand to see if anything in the printed exceptions (Patent rights, eminent domain, etc) could be considered or stretched to fit, and, of course, policies may"ve been changed because of these questions...
If buying out of one of these possibly questionable foreclosures, I"d be extremely careful...
 
Its at the foreclosure sale ("on the courthouse steps") where title insurance would not cover the buyer. If the bank took the property back at the foreclosure sale, then sold to you, you should be able to get a clear title policy, and if a problem came up, it would be between the bank and the title company. It is very important to examine the title report VERY carefully for weasel words, when you buy under these circumstances. Make sure you're covered, before you sign on the line.

If you bought from the bank without notice of the defect in title, you would generally get to keep the property (as a Bona-Fide Purchaser)- and the issue would be money damages between the wrongly foreclosed person and the bank/and or title company.
 
Mike: Sorry I misunderstood your original comment re" title ins policies.
Yes, judicial and Trust Deed non-judicial sales"ve been considered practically untouchable, and for good reasons...
What"s different now is that we"ve never had this massive scale of incomplete/incompetent/fraudulent paperwork handling (pick your term) affecting thousands (millions??)of foreclosures; many are wondering if the problems are large enough the courts will upset this long-held position.
 
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